How Long Does An IVA Stay On Your Credit File?
An Individual Voluntary Arrangement (IVA) serves as a widely used debt solution, enabling you to eliminate unmanageable debt by repaying only a portion of the total amount owed.
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However, even after settling your debts and receiving an official discharge from the arrangement, the IVA remains on your credit file, negatively affecting your credit score.
This comprehensive guide from IVA Helpline provides essential information on the impact an IVA has on your credit history, including the duration of its presence on your credit file and strategies to enhance your credit score post-IVA.
What is an IVA?
In order to comprehend the reason behind an IVA showing up on your credit report, it is essential to grasp the concept of an IVA and its functioning.
An IVA, or Individual Voluntary Arrangement, is a legally binding contract between you and your creditors, enabling you to pay off your debts through affordable monthly instalments based on your income.
Although an IVA does not eliminate your debts entirely, it allows you to be officially discharged from them and deemed debt-free once the IVA term concludes, provided you have met your obligations and completed the specified monthly payments as outlined in your proposal.
At IVA Helpline, we aim to assist you in understanding the intricacies of IVAs and their impact on your financial situation. Our guidance will help you navigate the challenges and benefits associated with this debt management solution, ensuring you make informed decisions regarding your financial future.Check if you qualify
How long does an IVA last?
The duration of an Individual Voluntary Arrangement (IVA) varies from how long it remains on your credit report.
For instance, unlike a Debt Management Plan, which continues until the entire debt is fully repaid, an IVA typically lasts for five years. This period can be extended to six years if you’ve taken a payment break, failed to meet the obligations stated in your proposal, or missed a monthly payment during the term.
However, an IVA can also be shorter than five years if you can repay your debt in one lump sum. This process generally takes about six months and can assist you in clearing your debts, paving the way for a debt-free future. As IVA Helpline, we are here to support you throughout this journey.
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Our trained advisors are here to help, so if you think an IVA proposal is one of the best debt solutions for you, don’t hesitate to call us on 0800 464 7235 to speak to one of our trained debt advisors or click below to see if you qualify…Check if you qualify
How long does an Individual Voluntary Arrangement stay on your credit file?
As with other formal debt solutions, such as Debt Relief Orders, an Individual Voluntary Arrangement (IVA) will be recorded on your credit file.
However, while IVAs typically last for five years, they will remain on your credit report for a total of six years from the date of approval. If multiple debts are included in your IVA, they might appear as individual entries on your credit file.
Consequently, even after completing your IVA in five years, it will stay on your credit file for an additional year but will be marked as ‘complete’ instead of ‘active’.
During this period, your credit score may be negatively impacted, making it difficult for you to obtain loans, mortgages, or car financing.
It’s important to note that lenders often inquire about past IVAs (even if they are no longer on your credit file), and it’s crucial to provide an honest response.
This information allows them to understand your financial history better and assess your responsibility as a borrower.
How does an IVA affect my credit score?
While an IVA remains on your credit file, it negatively impacts your credit score and ability to obtain credit, even if you previously had a good credit rating.
When evaluating credit applications, lenders consider various factors, including your credit history and score. Although an IVA on your credit file indicates to lenders that you’re actively repaying outstanding debts, it also signifies past payment failures and potential future missed payments.
Additionally, your IVA details will be recorded on a public register called the Individual Insolvency Register, which is freely accessible online. However, as it is primarily used by lenders and credit reference agencies, it is improbable that your friends, family, or colleagues will view your information.Check if you qualify
Can I get credit during an IVA?
While it is generally not advised, obtaining certain types of credit during an active IVA is still possible.
However, this may further harm your already low credit score, and there are restrictions on the amount of credit you can apply for.
For instance, you can borrow up to £500 during an IVA, but if you need more than that, you must first obtain permission from your Insolvency Practitioner (IP). Attempting to secure credit over £500 without your IP’s approval could lead to a failed IVA, forcing you to seek an alternative debt solution
Can I get an IVA removed from my credit file?
An IVA cannot be removed from your credit file before the completion of its six-year term, even if the debt has been repaid early or through a single lump sum payment. Upon repayment, the status will change from ‘active’ to ‘complete.’ Generally, an IVA is automatically removed from your credit record after six years, and no further action is required on your part.
In some rare cases, your IVA may remain on your credit report beyond the six-year period, which could negatively affect your ability to obtain loans or mortgages. If this occurs, it is crucial to promptly contact the appropriate credit reference agencies to report the mistake and request an update.
They may require proof that your IVA term has ended, typically in the form of a completion certificate. As IVA Helpline, we recommend sending a copy of your completion certificate to all three credit agencies as soon as you receive it, ensuring your information is accurate and up to date.Check if you qualify
How can I improve my credit score after an IVA?
Although an IVA may remain on your credit file after completing the term, there are measures you can implement to rebuild your credit score and enhance your financial situation. These steps consist of:
- Seeking complimentary debt advice
- Obtaining a pre-paid credit card
- Settling your credit card balance in full each month
- Allocating funds for living expenses
- Refraining from excessive or unwarranted purchases
As IVA Helpline, we understand the importance of improving your financial circumstances, and by following these recommendations, you can work towards a better credit score and overall financial health.
Where can I get more advice on IVAs and other debt solutions?
Explore your financial options and receive the assistance you need to address your debt today by speaking to a friendly advisor at the IVA Helpline on 0800 464 7235 or check if you qualify online